Hong Kong Stocks Slide, Caps Weekly Drop; Lenovo Gains

May 24 (Bloomberg) -- Hong Kong stocks fell, sending the
benchmark index to its biggest weekly drop since April 5.
Developers led the declines, while Lenovo Group Ltd. jumped
after saying it’s seeking acquisitions to boost smartphone and
tablet businesses.

Lenovo, a computer maker that has $3 billion in cash
reserves, advanced 3.8 percent after an executive said there was
“no limit” to the size of acquisitions as it expands. Wharf
Holdings Ltd., the third-largest developer in Hong Kong by
market value, slid 1.6 percent after the shares went ex-dividend. China Overseas Land & Investment Ltd., the largest
mainland property company traded in Hong Kong, dropped 1.7
percent, leading developers lower.

The Hang Seng Index slid 0.2 percent to 22,618.67 at the
close, with six stocks gaining for every five that fell. The
equity gauge yesterday slid 2.5 percent, and capped a 2 percent
decline this week. Volume today was 13 percent less than the 30-day intraday average. The Hang Seng China Enterprises Index of
mainland companies dropped 0.2 percent to 10,722.30.

“There may be some technical rebound but sentiment remains
cautious,” said Linus Yip, chief strategist at First Shanghai
Securities in Hong Kong. “We already had a good move in the
past month. In the short- to medium-term the market may go into
consolidation.”

The Hang Seng Index, the worst-performing developed-market
gauge this year, is down 0.2 percent this year amid signs
China’s growth is slowing. The gauge traded at 10.8 times
estimated earnings, below its five-year average of 12.6,
according to data compiled by Bloomberg.

The Hang Seng Index yesterday dropped by the most since
April 5 after a preliminary survey showed China’s manufacturing
unexpectedly contracted. Shares also fell on concern the Federal
Reserve will scale back stimulus.

Developers Drop

Wharf Holdings fell 1.6 percent to HK$72.65. Yesterday was
the last day to buy the shares and collect a dividend for the
current period. China Overseas Land slumped 1.7 percent to
HK$23.10, leading a measure of property developers lower on the
Hang Seng Index.

China will expand property tax trials, according to a State
Council statement on the central government website today.
Mainland-traded developers fell this week after China Securities
Journal reported the nation may expand property tax trials to
more cities this year.

Potential restrictions on property will put a cap on gains
in the industry, Wu Kan, a Shanghai-based fund manager at
Dazhong Insurance Co., said on May 20.

China Huiyuan Juice Group Ltd., the nation’s biggest juice
maker by market share, declined 4.3 percent to HK$3.13. The
company said it will buy a concentrates-and-puree maker from its
chairman for HK$3.42 billion ($441 million) in new stock.

Futures on the Hang Seng Index rose 0.3 percent to 22,583.
The HSI Volatility Index slid 4.8 percent to 17.50, indicating
traders expect a swing of 5 percent for the equity benchmark in
the next 30 days.